Regulated trader: Indonesia's reluctance to engage in trade liberalisation

Abstract

Despite the liberalisation initiatives and subsequent economic successes of other ASEAN nations, Indonesia remains committed to its protectionist economic policies. By using qualitative research to analyse Indonesia’s history following its independence, this thesis explores the circumstances that perpetuate the country’s maintenance of its self-sufficient economic policies. Three major factors are found to be present throughout Indonesia’s political debates on economic issues both past and present. First is a desire by both the political elites and the general population to increase Indonesia’s ability to be self-sufficient by increasing agricultural production and manufacturing. Second is a wish by those in power to maintain their position, even to the detriment of economic performance. Finally, there is a fear of domination of the economy by those seen as being foreign, including Chinese-Indonesians. While these factors are present in many other ASEAN nations, they have become so heavily intertwined in the Indonesian political system and with the voting public that any politicians who are seen to be supporting liberalisation will inevitability fail to be nominated by their party or lose their next election. This combination of factors means that there will be no significant move to liberalise the economy from within Indonesia in the foreseeable future. Any attempted trade liberalisation negotiation is bound to be subverted or ignored by the political elites because they view liberalisation as being detrimental to the country or more significantly to their tenure in office.